The term "create stories" in this context does not mean made up the story it means create a story out of the report the way journalists create a story out of a news event
Even if Trump was just relaying local racist rumors (he wasn't, it was entirely fabricated), would he be justified in it? There was absolutely zero evidence of it, and there still isn't.
It's just a lie in service of fueling hatred toward the most poorest people in this country. Fascism 101.
The mayor of the town (a Republican) came out and straight up said Trump was lying about his town. The only people reporting it could barely point to the town on a map.